Business reporter

The Commonwealth has agreed to pay Sydney businessman Vanda Gould $364,500 in legal costs after a botched federal police prosecution on tax and money laundering charges.

Mr Gould, who is chairman of listed investment company CVC, former Sunland chairman John Leaver and Swiss national Peter Borgas were arrested in October last year as part of an Operation Wickenby investigation over companies in tax haven the Cayman Islands.

They were accused of conspiracy to defraud the Commonwealth and conspiracy to deal with property intending that it be used as an instrument of crime over an alleged $30 million tax evasion scheme.

However, the charges, which attract up to 25 years' jail, were dropped in May.

The tax stoush has also been costly for the Caymanian authorities, who were recently ordered to pay costs of more than $140,000 to two companies associated with Mr Gould after a court found the Cayman Islands Tax Information Authority (CITIA) unlawfully gave the Australian Taxation Office secret documents showing that Mr Gould secretly controlled the companies.

In a July 30 judgment, Grand Court judge Charles Quin ordered CITIA to pay the two companies $US143,665 and slammed it for delaying its appeal of his original ruling.

He said CITIA "has not satisfied this court that there is a real prospect of success".

After delays obtaining counsel, CITIA's appeal against the September 2013 ruling is now unlikely to be heard until early next year.

Despite the Cayman Islands ruling, the documents were admitted as evidence in a separate Federal Court lawsuit where a complex network of offshore companies associated with Mr Gould, Mr Leaver and Mr Borgas are trying to claw back a $40 million tax bill.

The ATO's use of the documents caused an international ruckus, throwing into doubt the willingness of CITIA to continue sharing information with Australian authorities under an information sharing agreement signed in 2010.

It also opened up the possibility ATO officials might be arrested and prosecuted if they visited the Cayman Islands, the Federal Court heard.

"Although the damage to Mr Gould's reputation can never be repaired, particularly in this age of digital media, the reimbursement of legal fees means that, to some degree, the financial impact of this terrible affair has been lessened," she said.

Hearings in the Federal Court civil case have finished but Justice Nye Perram is yet to hand down his judgment.